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AICPA provides guidance on FSA certification letters

In response to a Farm Service Agency (FSA) initiative requesting that
CPAs certify some clients’ income, the AICPA has worked with the FSA
to create a certification letter CPAs can use and is providing its
members with sample engagement and disclosure letters to be used in
connection with providing a certification letter for clients.

In April, the FSA, a branch of the U.S. Department of Agriculture,
sent 15,000 letters
under the Food, Conservation, and Energy Act of 2008, P.L. 110-234,
requesting persons who receive payments through certain farming
programs to certify their income. To qualify for these programs, the
persons need to prove that their adjusted gross income (AGI) does not
exceed specified limitations found in 7 U.S.C. Section 1308-3a. The
persons can prove compliance with the limitations by furnishing three
years of their federal income tax returns or by providing a
certification letter from a CPA or attorney. The person is required
under Section 1308-3a(d) to provide “certification” from a CPA or
other third party as an alternative to providing the actual tax
returns.

AICPA members have been questioning whether they can respond to the
letter, given that they prepare tax returns based on information
provided by the taxpayer and do not audit or otherwise verify the
information used in the preparation of the returns. Furthermore,
professional standards prescribe what CPAs can and cannot do in these
circumstances, and there are professional risks to signing such
letters.

To answer these member concerns, the AICPA created a new dedicated webpage coordinated with
the FSA’s release of a sample certification statement for average AGI
compliance verification. The webpage provides issue-specific resources
as well as additional guidance. The AICPA worked with the FSA to craft
a resolution that meets both the FSA
requirements and the professional standards of its members.

The AICPA is encouraging participants who receive the FSA letter to
provide the last three years of their federal income tax returns for
compliance purposes. However, in some limited situations, those tax
returns will not provide sufficient information to meet the compliance
initiative—e.g., where the person qualifies individually for the farm
program but files tax returns using married filing jointly status. In
that case, the only remaining option would be the certification letter
from a CPA or attorney.

The certification
letter of average AGI compliance was agreed on by the FSA and the
AICPA for CPAs to use when they cannot avoid providing certification.
The AICPA is also providing for its members a sample
engagement letter and sample
disclosure letter, which it suggests CPAs use in connection with
providing the statement for average AGI compliance verification. The
engagement and disclosure letters should be signed by the client
before the member signs the certification.

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